IRS Gives $104 Million To UBS Whistleblower… Who The DOJ Put In Jail

from the mixed-messages dept

Sometimes it seems that the federal government’s left hand has no idea what it’s right hand is doing. Bradley Birkenfeld, a former banker for Swiss banking giant UBS, blew the whistle on UBS practices of helping Americans hide their money offshore. For his troubles, the Justice Department charged him, leading to a plea deal in which he plead guilty to fraud conspiracy and was put in jail for a few years. He just got out a month ago… and now the IRS has handed him $104 million for the whistleblowing, which resulted in UBS paying $780 million to the government to avoid prosecution itself. The IRS claims they’re doing this to encourage others to blow the whistle on tax fraud… though they might want to warn the DOJ not to put their whistleblowers in prison. That said… $104 million seems somewhat insane. I realize that it may have resulted in the US government getting a lot more money, but $104 million still seems like a giant sum of money to give a guy who, as the government’s own efforts show, participated in fraud. If the idea is to “get the word out” to whistleblowers, you would think that smaller sums, still in the millions of dollars, would do the trick…

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Companies: ubs

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Comments on “IRS Gives $104 Million To UBS Whistleblower… Who The DOJ Put In Jail”

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Anonymous Coward says:

Maybe the left hand DOES know what the left hand did and is trying to compensate for that as well. If you wanted to encourage people to be whistleblowers even in the risk of prosecution then a hefty sum of $100+ million might be worth the risk. Paying someone a few thousand or even tens of thousands might not be enough to encourage anyone in the face of a overactive DOJ.

Zenity (profile) says:

I think the sum involved can only be explained if you take into account most government departments aversion to decimal points, preferring whole numbers whenever possible.

Compartmentalisation usually explains seemingly obtuse or perverse cases like this, many government departments really are totally unaware of each other, and often work in opposition to each other in some cases.

DannyB (profile) says:

If you only offer whistleblowers a paltry few million to blow the whistle on a scheme that could make vastly more than that, they’ll laugh at you rather than blow the whistle. It might be more profitable to participate in the behavior rather than blow the whistle on it.

Furthermore, blowing the whistle is a *lot* more likely to get the DOJ to throw you in jail than to just stay quiet and participate in the crime.

Anonymous Coward says:

So one guy gets the goodies while all the other whistle blowers get a legal case and a good chance to go to jail for a long time. It’s kinda like the lottery and under those odds, not really worth the idea of going to jail for the remote possibility that you could be lucky enough to win the next one compared to all the others that get nada.

Anonymous Coward says:

Re: Re:

Same thing happens when you help recover a stolen piece of art or recover the cargo of a sunken ship, the customary amount is 10%. Never a flat fee.
If this is going to spurr an instant wave of whistleblowing is another thing though, a potential whistleblower might want to wait untill more fraud has been comitted to increase the size of the award money. The DOJ not granting immunity to the whistleblower is another thing that would definately deter many whistleblowers.

Brian Penny (user link) says:

Whistleblowing Ain't Easy

The path of a whistleblower is a difficult one. I know this firsthand. For doing the right thing, I ended up losing my car, my home, and my friends. I was forced to sell nearly everything I own and move to the other side of the country, where I’m now broke and sleeping on the floor of a stranger’s apartment.

You can read about my struggles as a whistleblower exposing the larges bank fraud in history here:

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